To an industry insider who magi- cally fell asleep in 2010 and woke up as the ball dropped in Times Square to ring in 2015, the pharmaceutical industry
might be nearly unrecognizable. Five
years ago the Affordable Care Act had just
been passed and signed by the president;
today its consequences have flowed out
in all directions, transforming the way
healthcare is provided and paid for. Five
years ago mobile web was just catching
on; today it accounts for more than 60
percent of web traffic. The pharmaceutical executive of five years ago would be
overwhelmed by all the new audiences,
new decision makers, new expectations,
new media, new data and sources of information of today; even for those of us
who have not been napping for the past
five years, it can all be a little overwhelming. For this year’s Agenda overview,
Med Ad News spoke with a long list of
industry insiders, the people who have
to deal with this sort of tranformational
change every day. Here are the trends
that they told us would be most important for pharma marketers in 2015.

The changing marketplace

Topping the list of crucial developments
for pharma marketers in 2015 is the continuing transition in how health services
are provided and paid for. Today’s brand
manager is faced with a bewildering array of acronyms – the Accountable Care
Organization (ACO) and the Integrated
Delivery Network (IDN) are the two
most prominent of many – and each of
these has its own unique decision making
processes and value definitions. Pharma
companies are having to learn on the fly
how to deal with all these new decision
makers, a process that is causing perhaps
the largest single shift in selling strategy
in the entire history of the industry.

From the perspective of the healthcare
consultants at PwC, the changes wrought
in the marketplace by ACA and the rise
of new provider and payer entities will
drive nothing less than a change in the
real meaning of value for pharmaceutical
companies and their constituencies, leading to a greater focus on real outcomes
accompanied by real data.

“The shift of risk in selection and pay-ment for therapeutic treatment to vari-ous provider entities introduces newvariables that the pharmaceutical prod-uct industry will need to orient towards,namely quality and total cost of care,”says Warren Skea, principal, PwC. “Nolonger will pharmaceutical product com-panies’ strategy that focuses on physiciandirected therapy based on their clinicalknowledge and payors processing claimsbased on their approved cost of treatmentanalysis, define and determine their suc-cess.”Nothing less than a new definition of val-ue through outcomes-based evidence thatproves such value is what stands betweensuccess and failure for pharma companiesnow, Skea suggests. The very definition ofpayer has begun to radically shift to a va-riety of new models that are both consoli-dating and adopting risk for cost (bundles,capitation) and care (quality, outcomes), tosay nothing of employers and consumerswho are the primary funding sources. Andthis shift is driving a corresponding changein payer expectations.

“The payer as provider is looking formaterially different shifts in clinical qual-ity impact and the total cost of care, bothupstream and downstream, as related toany product therapy,” Skea says. “Pro-viders also want to know which patientcohorts will receive the greatest impactfrom the day a therapy is authorized, notafter months or years. Determining theholistic, incremental, and/or avoidablecosts of care, across a broad range of ac-tual operating costs incurred by deliverysystems outweighs the incremental dis-count that typifies the current state.”So outcome study proof and the docu-mentation of cost and quality differencesis going to have to take place in the labo-ratory of every day clinical delivery wherethe variables of real life impact therapeu-tic performance. “The validity of valuemeasured is best spoken for by providerindustry leaders that have the trust andstature of peers across their community,”Skea says. “This has become necessary toavoid the skepticism that can often ac-company product company-led studies.

This shift to provider system definitionsfor outcome value has put a premiumupon the product industry’s need toabandon the vertically integrated modelthat was committed to a pre-determinedvalue definition over to a highly collabor-ative outcome model that is intent upondiscovering value as an ongoing journey.In this way product companies can moreresponsibly convert to risk based contractagreements where outcomes and the datato support them can be trusted and op-erationalized across the provider com-munity.”In addition to the consolidation of pro-vider networks into ACO/IDN modelsand rollout of the federal and state-levelexchanges, experiments with outcomes-based reimbursement and the muscle-flexing of the leading pharmacy benefitsmanagers to negotiate exclusive dealswith pharma is continuing to put generaldownward pressure on healthcare costs.This, says CEO David Ormesher of clo-serlook inc., presents both challenges andopportunities for pharma to assert its roleand value.

“At this point, most pharma compa-nies continue to play the role of vendor,”Ormesher told Med Ad News. “Most con-tracts are priced on volume-discounts,not on outcomes or value. In an environ-ment that is aligned around cost-reduc-tion and fee-for-value, winning on priceleads directly to commoditization. Forbrands that are competing with an effec-tive generic, there are fewer options toavoid this margin squeeze, but for many,the path forward looks like a businesspartner model. As healthcare in the Unit-ed States moves away from fee-for-ser-vice, pharma will need to move towardsmore partnership approaches to diseaseprevention, management and cure.”Taking a similar position, Patrick Jor-dan, chief administrative officer of En-core, a Quintiles company, believes thatthe shift in the marketplace commandsa different operating model among indi-

The Magazine of Pharmaceutical Business and Marketing • medadnews.com • February 2015 • Volume 34, Number 1 • $25

The business of marketing pharmaceuticals today would be almostunrecognizable to a visitor from ;ve years ago; the industry’s fatehangs on how industry leaders respond to all this change.

By Joshua Slatko josh.slatko@medadnews.com

A whole new ball game

he payer as provider is lookingfor materially different shifts inclinical quality impact and thetotal cost of care. T